Korea’s financial regulator on April 9 launched a special inspection into Samsung Securities over the brokerage’s “fat-finger” trading chaos, which saw non-existent stocks paid to its employees as dividends.
Under an employee stock ownership plan, Samsung Securities had been planning to pay cash dividends of 1,000 won (US$0.93) to its employees on April 6. However, the brokerage mistakenly paid them dividends in shares.
The chaos happened after a Samsung Securities trader made a keyboard entry mistake, typing “shares” instead of “won” in Korean when sending the dividends to employees.
Questions were also raised about whether the employees could sell the mistakenly deposited shares, which do not exist, on the stock market and how they could sell the shares without reporting it to the brokerage.
In a statement, the Financial Supervisory Service called the dividend chaos at Samsung Securities a “big financial incident that significantly undermines the safety of and trust in capital markets.”
The dividend error showed “grave moral hazard” and was a “serious problem” for the brokerage’s trading system, the FSS said.
The FSS will carry out the on-site inspection at Samsung Securities until April 19 and will closely look into the brokerage’s trading system.
It will also inspect whether the brokerage is taking measures to compensate ordinary investors who may have been affected by the mistake, the FSS said.
By Song Seung-hyun and newswires (firstname.lastname@example.org